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Pound Sterling to Euro Exchange Rate Struggles amid Latest Speech from ECB President Draghi

Pound to Euro Exchange Rate Gains Limited by Mixed Eurozone Data and ECB Hints

While the Pound Sterling to Euro (GBP/EUR) exchange rate is still trending above the week’s opening levels, its gains and movement have been modest at best as Brexit jitters weigh on the Pound (GBP) while the Euro (EUR) benefits from some faint support.

Despite last week’s broad and volatile movements, GBP/EUR only slipped from 1.1739 to 1.1685 throughout the week – and this week so far the pair has only recovered slightly to around the level of 1.1708.

As Pound investors were hesitant to make any big moves on the British currency ahead of a series of ‘indicative votes’ on Brexit, the Euro’s movement has also been mixed in reaction to the latest Eurozone news.

Eurozone data has been too mixed to offer the currency solid direction this week, and the latest speech from European Central Bank (ECB) President Mario Draghi included comments that ranged from dovish to more optimistic.

Pound (GBP) Exchange Rates Racked by Uncertainties Ahead of Brexit Votes

Investors have been hesitant to make any big moves on the Pound so far this week, as investors await signs of what’s next for the Brexit process.

The EU has delayed the Brexit process until at least the 12th of April, but amid a lack of clarity over what kind of Brexit UK Parliament wants there is still broad concern that Brexit could end with a no-deal outcome just over two weeks from now.

UK Parliament is set to hold ‘indicative votes’ on the direction Brexit should take next over the coming days – but the government has said it is not committed to following any of the conclusions Parliament comes to.

According to Paul Markham, Portfolio Manager at Newton Asset Management:

‘The possibility of no outstandingly well-supported option, however, remains, and would potentially obfuscate things still further’

Euro (EUR) Exchange Rates Mixed on Eurozone Data, European Central Bank (ECB) Comments

Monday’s German business confidence stats beat forecasts, but yesterday’s German consumer confidence and French business confidence fell short. Meanwhile, today’s French consumer confidence data simply met expectations.

As this weeks’ Eurozone data has done little to indicate the direction the Eurozone economy is heading in, investors have been hesitant to make big moves on the Euro.

Demand for the Euro was also mixed following this morning’s speech from European Central Bank (ECB) President Mario Draghi.

While Draghi noted that downside risks to the Eurozone had risen due to slowing global growth, he also said that the ECB may need to soften the impact of negative rates.

Draghi’s overall cautious tone kept pressure on the Euro, but his comments on negative rates helped the shared currency to avoid further losses.

Pound to Euro (GBP/EUR) Exchange Rate Investors Await Indicative Votes on Brexit

Despite this week’s news, the Pound to Euro exchange rate has generally trended narrowly this week with investors hesitant to make major moves on either currency ahead of big upcoming news.

Starting today, UK Parliament will hold ‘indicative votes’ on Brexit, and while the government has insisted it does not need to act on the results of these votes investors still hope it could point towards some kind of solution on Brexit.

If there is any sign that a soft Brexit could become more likely, the Pound could strengthen. However, a lack of progress or the possibility of a general election or other leadership shakeup could cause the Pound to slump.

Euro investors, on the other hand, will be anticipating major Eurozone ecostats due for publication over the coming sessions.

Overall Eurozone confidence data from March will be published tomorrow, as well as German inflation projections for March.

German retail sales and unemployment, as well as French inflation figures, will come in on Friday and are likely to influence Pound to Euro (GBP/EUR) exchange rate movement if they surprise investors.